Here is an portion of the opinions from Citi and Tony Wible. They HAVE NOT changed their outlook and still have it rated as a "BUY". S&P is who changed their outlook from "BUY" to "STRONG BUY"
"Investment strategy We rate GME Buy/High Risk (1H) and assign a $66 target price. We look for GME to deliver superior earnings growth as it benefits from the broadening scope of the video game industry. New technology, demographic shifts, and the diversity of games and gaming platforms are expanding the gaming demographic (e.g., the Wii -- the casual gamer, PS2 -- the budget gamer, PSP - - the mobile consumer, etc.). This dynamic is helping to increase the size and longevity of gaming cycles, which are further enhanced by international growth opportunities, US store expansion, and GME’s unique “Used” games business. We see GME’s “Used” business as uniquely lengthening and strengthening the already robust gaming cycle. With the potential for additional price cuts and improving visibility in the title line-up toward the back half of 2008 and into 2009, we believe the gaming cycle still has room for growth. Given the 25% earnings growth guidance the company expects in 2009, the economic hedge provided by the Used business, and potential for other catalysts (i.e., the PS3 benefiting from Blu-Ray, a fiscal and monetary stimulus), we believe GME will stand out as an excellent midcap growth story in light of the prevailing economic backdrop.
We believe GME should trade at 22x our 2009 EPS estimate of $3.00. Our target multiple assumption rests upon our view that GME can sustain an above average multiple given the the strength of the gaming cycle and its independence from the economic one. A 22x P/E multiple on our $3.00 estimate yields a $66 target price. Our secondary valuation methodology, a DCF analysis, suggests a $72 target price based on a WACC of 8.76%, although we use the P/E methodology as this appears to be the key focus of investors."
S&P UPGRADES SHARES OF GAMESTOP TO STRONG BUY FROM BUY
Jul-Q EPS of $0.34 vs. $0.13 is $0.06 above our estimate, driven by comp-store growth of 20%. While comps become more challenging to hurdle, we continue to expect strong growth through at least calendar 2009 despite weak consumer spending trends. As a result, we are raising our FY 09 (Jan.) and FY 10 operating EPS estimates to $2.52 and $3.08, from $2.40 and $2.90. Also, as the installed base reaches maturity, mix shift will become more favorable to earnings, driven by higher sales of used games.We think GME shares offer a compelling value at under 14X our FY 10 EPS estimate. M.Souers 08/21/2008 12:32:37